Monday, December 17, 2007

Investigative journalist Seymour Hersh has consistently led the way in telling the story of what's really going on in Iraq and Iran. SPIEGEL ONLINE spoke to him about America's Hitler, Bush's Vietnam, and how the US press failed the First Amendment.

12/16/07 "Spiegel" --- - SPIEGEL ONLINE: Iranian President Mahmoud Ahmadinejad was just in New York for the United Nations General Assembly. Once again, he said that he is only interested in civilian nuclear power instead of atomic weapons. How much does the West really know about the nuclear program in Iran?

Seymour Hersh: A lot. And it's been underestimated how much the International Atomic Energy Agency (IAEA) knows. If you follow what (IAEA head Mohamed) ElBaradei and the various reports have been saying, the Iranians have claimed to be enriching uranium to higher than a 4 percent purity, which is the amount you need to run a peaceful nuclear reactor. But the IAEA's best guess is that they are at 3.67 percent or something. The Iranians are not even doing what they claim to be doing. The IAEA has been saying all along that they've been making progress but basically, Iran is nowhere. Of course the US and Israel are going to say you have to look at the worst case scenario, but there isn't enough evidence to justify a bombing raid.

SPIEGEL ONLINE: Is this just another case of exaggerating the danger in preparation for an invasion like we saw in 2002 and 2003 prior to the Iraq War?

Hersh: We have this wonderful capacity in America to Hitlerize people. We had Hitler, and since Hitler we've had about 20 of them. Khrushchev and Mao and of course Stalin, and for a little while Gadhafi was our Hitler. And now we have this guy Ahmadinejad. The reality is, he's not nearly as powerful inside the country as we like to think he is. The Revolutionary Guards have direct control over the missile program and if there is a weapons program, they would be the ones running it. Not Ahmadinejad.

SPIEGEL ONLINE: Where does this feeling of urgency that the US has with Iran come from?

Hersh: Pressure from the White House. That's just their game.

SPIEGEL ONLINE: What interest does the White House have in moving us to the brink with Tehran?

Hersh: You have to ask yourself what interest we had 40 years ago for going to war in Vietnam. You'd think that in this country with so many smart people, that we can't possibly do the same dumb thing again. I have this theory in life that there is no learning. There is no learning curve. Everything is tabula rasa. Everybody has to discover things for themselves.

SPIEGEL ONLINE: Even after Iraq? Aren't there strategic reasons for getting so deeply involved in the Middle East?

Hersh: Oh no. We're going to build democracy. The real thing in the mind of this president is he wants to reshape the Middle East and make it a model. He absolutely believes it. I always thought Henry Kissinger was a disaster because he lies like most people breathe and you can't have that in public life. But if it were Kissinger this time around, I'd actually be relieved because I'd know that the madness would be tied to some oil deal. But in this case, what you see is what you get. This guy believes he's doing God's work.

SPIEGEL ONLINE: So what are the options in Iraq?

Hersh: There are two very clear options: Option A) Get everybody out by midnight tonight. Option B) Get everybody out by midnight tomorrow. The fuel that keeps the war going is us.

SPIEGEL ONLINE: A lot of people have been saying that the US presence there is a big part of the problem. Is anyone in the White House listening?

Hersh: No. The president is still talking about the "Surge" (eds. The "Surge" refers to President Bush's commitment of 20,000 additional troops to Iraq in the spring of 2007 in an attempt to improve security in the country.) as if it's going to unite the country. But the Surge was a con game of putting additional troops in there. We've basically Balkanized the place, building walls and walling off Sunnis from Shiites. And in Anbar Province, where there has been success, all of the Shiites are gone. They've simply split.

SPIEGEL ONLINE: Is that why there has been a drop in violence there?

Hersh: I think that's a much better reason than the fact that there are a couple more soldiers on the ground.

SPIEGEL ONLINE:So what are the lessons of the Surge?

Hersh: The Surge means basically that, in some way, the president has accepted ethnic cleansing, whether he's talking about it or not. When he first announced the Surge in January, he described it as a way to bring the parties together. He's not saying that any more. I think he now understands that ethnic cleansing is what is going to happen. You're going to have a Kurdistan. You're going to have a Sunni area that we're going to have to support forever. And you're going to have the Shiites in the South.

SPIEGEL ONLINE: So the US is over four years into a war that is likely going to end in a disaster. How valid are the comparisons with Vietnam?

Hersh: The validity is that the US is fighting a guerrilla war and doesn't know the culture. But the difference is that at a certain point, because of Congressional and public opposition, the Vietnam War was no longer tenable. But these guys now don't care. They see it but they don't care.

SPIEGEL ONLINE: If the Iraq war does end up as a defeat for the US, will it leave as deep a wound as the Vietnam War did?

Hersh: Much worse. Vietnam was a tactical mistake. This is strategic. How do you repair damages with whole cultures? On the home front, though, we'll rationalize it away. Don't worry about that. Again, there's no learning curve. No learning curve at all. We'll be ready to fight another stupid war in another two decades.

SPIEGEL ONLINE: Of course, preventing that is partially the job of the media. Have reporters been doing a better job recently than they did in the run-up to the Iraq War?

Hersh: Oh yeah. They've done a better job since. But back then, they blew it. When you have a guy like Bush who's going to move the infamous Doomsday Clock forward, and he's going to put everybody in jeopardy and he's secretive and he doesn't tell Congress anything and he's inured to what we write. In such a case, we (journalists) become more important. The First Amendment failed and the American press failed the Constitution. We were jingoistic. And that was a terrible failing. I'm asked the question all the time: What happened to my old paper, the New York Times? And I now say, they stink. They missed it. They missed the biggest story of the time and they're going to have to live with it.

Sunday, December 16, 2007

On October 17, George Bush made a remarkable statement concerning the mounting tensions between the US and Iran: “If you’re interested in avoiding World War III, it seems like you ought to be interested in preventing [Iran] from having the knowledge necessary to make a nuclear weapon.” Bush has since repeated and defended this comment. It testifies to the superficiality of media commentary that this declaration has not been subjected to critical analysis.

Bush’s statement has profound and far-reaching implications. Washington’s deliberate stoking of political tensions with Iran over the last year—with accusations of Iranian military assistance to the anti-US Iraqi resistance, and the branding of portions of the Iranian armed forces as “terrorist”—does not simply threaten Iran. It is a confrontation with a global cast of characters.

Further investigation of the context of Bush’s comments substantiates their significance. He made his initial statement about World War III just one day after Russian President Vladimir Putin had said during a visit to Iran, “Not only should we reject the use of force, but also the mention of force as a possibility.”

Clearly, Bush’s remarks were a response to Putin, a fact that has been barely, if at all noted in the bourgeois media. However, such inflammatory comments, coming on the heels of an important state visit by the Russian president, indicate that US hostility to Iran is bound up with global considerations central to the interests of US imperialism.

The verbal exchange between Putin and Bush raises important questions. What is so crucial about Iran that its acquisition of a few crude nuclear devices—far outweighed by the hundreds of strategic nuclear devices held by Israel, let alone the thousands possessed by the major nuclear powers—would trigger a world war? When Washington contemplates fighting World War III over an Iranian nuclear weapon, whom does it view as its potential adversaries, and why?

Iran, oil, and the geopolitics of the Persian Gulf

Iran is at the heart of oil-rich, war-torn Southwest Asia. It lies on the north shore of the Persian Gulf, which holds 63 percent of the world’s proven oil reserves. Immediately to the north of Iran lie Turkey, the Caucasus, the Caspian Sea and the former Soviet states of Central Asia—springboards to Europe, Russia and China. By virtue of this geography, control of Iran is a valuable prize for all the major capitalist powers, which could use it to decisively increase their influence in commercial and diplomatic relations.

Iran’s own energy reserves are massive. According to US Department of Energy figures, Iran has the second largest proven oil reserves in the Middle East—136.3 billion barrels. It also has 970 trillion cubic feet of natural gas—the second-largest reserves in the world. Its oil and gas exports account for the vast bulk of its activity in international markets, generating 85 percent of export revenue and 65 percent of state revenue. It exports over 2.5 million barrels of oil per day and is a critical supplier to East Asia and Europe.

Even more than its own energy reserves, Iran owes its strategic importance in the Persian Gulf energy industry to its position astride the Gulf’s shipping lanes. Oil shipped out of the Gulf on tankers must pass through the Strait of Hormuz off Iran’s southern coast to reach the Indian Ocean.

Anthony Cordesman of the US Center for Strategic and International Studies writes: “Oil flows through the Strait of Hormuz account for roughly 40 percent of all world traded oil.” He cites International Energy Agency figures showing that, of the 17.4 million barrels shipped daily through the Straits of Hormuz, 13 million travel east, through the Indian Ocean and the Straits of Malacca near Singapore, to East Asia. Of the remainder, 3.5 million barrels travel through the Bab el-Mandab into the Red Sea, to Europe and the US.

He continues: “Iran’s coastline is particularly important because tanker and shipping routes pass so close to Iran’s land mass, the islands it controls in the Gulf, and its major naval bases. At the narrowest point (the Strait of Hormuz), the Gulf narrows to only 34 miles wide, with Iran to the north and Oman to the south. The key passages through the Strait consist of 2-mile wide channels for inbound and outbound tanker traffic, as well as a 2-mile wide buffer zone.”

Tehran has purchased numerous cruise missiles from Russia and China and deployed them on patrol boats and at naval bases along these shipping lanes. Iranian officials, including Ayatollah Ali Khamenei, have repeatedly said that, in the event of a US attack on Iran, energy shipments through the region will be “jeopardized.”

Iran has emerged from the 2003 US occupation of Iraq as the most serious regional obstacle to the strategy of US imperialism in the Persian Gulf. It wields considerable influence within the Shiite fundamentalist parties that have functioned as Washington’s favored quislings inside Iraq.

Iran also has potential political influence with the population of the southern Gulf shore. In Saudi Arabia’s oil-rich Eastern Province, as well as Bahrain, US-backed Sunni monarchs rule over an oppressed Shiite population subjected to sectarian discrimination. These monarchs are terrified of any Shiite-populist political agitation like that carried out during the early years of the 1979 Iranian Revolution.

Iran has been under a US embargo since the 1979 Revolution overthrew the US-backed Shah. Its oil is largely traded with other powers. Asia accounts for the largest share (56 percent, largely to Japan and China, with lesser amounts to Korea, India and Southeast Asia); Europe, especially Italy and France, buys 29 percent of Iran’s oil exports. Europe, China and Korea also supply over 50 percent of Iran’s imports, and several European corporations have set up manufacturing operations there.

Iran as a global commercial gateway

Iran is a potential nexus of oil pipelines and trade routes between all the major geopolitical competitors of the US bourgeoisie. It is a transit point, via its northwestern border, for oil and gas flowing from the Middle East and Central Asia to Turkey and the European market. Via its northeastern border with the former Soviet republic of Turkmenistan, it could become a transit point to Kazakhstan and thence to western China.

Iran has taken on a particularly vital role in this last regard, since the other land routes to the Indian Ocean from Central or East Asia are barred—either by geographical barriers such as the Himalayas, or by the permanent state of civil war in US-occupied Afghanistan and the increasing destabilization of Pakistan.

Iran has significant potential to help the former Soviet republics of Central Asia (notably Kazakhstan, Turkmenistan and Azerbaijan) ship their oil and gas via the Indian Ocean to world markets. This is particularly important since, in the aftermath of the industrial collapse that accompanied the dissolution of the USSR, the region’s economy has largely been rebuilt around oil and gas exports, enriching a narrow layer of former Stalinist apparatchiks. Currently, all oil and gas is exported through a Soviet-era pipeline network controlled by the Russian corporation Gazprom.

The question of Central Asia’s oil and gas has long held the attention of US corporations and diplomats. At a 1998 hearing of the US House of Representatives’ Committee on International Relations, Frederick Starr of the Central Asia Institute of Johns Hopkins University noted: “The heaviest burdens of the measures we are taking toward Iran fall disproportionately on Azerbaijan, Kazakhstan and Turkmenistan, for it prevents them from exporting their oil by one of the most obvious alternative routes to Russia, namely Iran. The US position has been to argue that this would not be in the Central Asians’ best interests. None of our friends in the region agree.”

Other speakers at the hearing also admitted that the US veto of pipeline construction through Iran significantly distorts the region’s economy. Unocal executive John Maresca described Russian plans for a pipeline to the Black Sea port of Novorossiysk and a US plan for a pipeline through the Caucasus (from Baku, Azerbaijan to Tblisi, Georgia and to Ceyhan, Turkey—the so-called BTC pipeline). Both pipelines are now operational.

Maresca said: “Even if both pipelines were built, they would not have enough total capacity to transport all the oil expected to flow from the region in the future. Nor would they have the capability to move it to the right markets.... Western Europe, Central and Eastern Europe, and the Newly Independent States of the former Soviet Union are all slow growth markets where demand will grow at only a half a percent to perhaps 1.2 percent during the period 1995 to 2010. Asia is a different story altogether.”

Since then, Iran has developed pipeline links to Turkmenistan, sealing a deal to pump 30 billion cubic meters of natural gas per year from Turkmenistan through Iran and Turkey to Europe. However, such links would undoubtedly multiply if Iran were not living under the constant threat of US attack.

Iran has also become increasingly active in regional diplomacy. Since 2006, it has had observer status at the Shanghai Cooperation Organization (SCO), a regional grouping including China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. The SCO has actively lobbied for the closure of US military bases in Central Asia obtained just after the September 11, 2001 terrorist attacks, during the initial US attack on Afghanistan.

These basing rights have now largely been revoked, as Central Asian governments have come to view Washington as principally dedicated to their overthrow—especially after the failure of the US-backed “Tulip Revolution” in Kyrgyzstan and the US-backed Andijan uprising in Uzbekistan, both in 2005.

Part 2: Eurasian geopolitics and US threats against Iran

This is the second article in a three-part series.

The Bush administration’s warnings that a world war could be fought as a result of a US-Iranian confrontation inevitably raise the question: what other countries might be drawn into a military conflict set into motion by an attack on Iran by the United States?

Though this question cannot be answered with certainty, it is a fact that the two countries most actively shielding Iran in negotiations over sanctions against Iran’s nuclear programs—Russia and China—have been publicly and repeatedly described as potential targets of the US military.Both have considerably increased their economic weight relative to the US in recent years—China due to the explosive development of its cheap-labor manufacturing base, Russia thanks to the high prices for oil and gas on world energy markets. Though their interests diverge in many other areas, Russia and China are united by their fear of the economic and military consequences of a US attack on Iran. From Washington’s standpoint, however, this unity is an intolerable threat to the world position of the US bourgeoisie.

US strategists have warned that they would do all in their power to prevent the emergence of a strategic competitor on the Eurasian landmass. In his 1998 book The Grand Chessboard, former Carter administration National Security Advisor Zbigniew Brzezinski warned: “It is imperative that no Eurasian challenger emerges, capable of dominating Eurasia and thus of also challenging America.”

After the terrorist attacks of September 11, 2001, these warnings have become even more threatening, with the public announcement of preparations for nuclear war.Iran and the Russian bourgeoisie

To the emerging Russian bourgeoisie, whose wealth is based to a great extent on its looting of the state property and natural resources of the old Soviet state, US domination of Iran is also an intolerable threat. President Vladimir Putin’s economic and geopolitical strategy has been developed around oil and gas exports, including the control of export revenues earned by Central Asian oil and gas.

The Russian bourgeoisie’s relations with Iran reflect significant financial interests. Russia’s oil and gas exports accounted for 61 percent of its export revenues in 2005 and 65 percent in 2006, according to World Bank figures.

The World Bank concluded: “Outside of natural resources and metals, Russia has few advantages on international markets.” The Russian bourgeoisie thus has every reason to prevent the US from controlling Iran and gaining an even tighter hold on world oil and gas markets—by controlling Iran’s oil and gas, or by building new, competing export pipelines from the former Soviet republics of Central Asia.

The military component of Russia’s opposition to US control of Iran is, if anything, even more essential.

US imperialism does not view the collapse of the USSR as a reason to accommodate the Russian bourgeoisie, but rather as an invitation to press its advantage. This was underscored in a 2005 analysis, “America Unplugged,” by the Stratfor web site, which has close links to US intelligence agencies.

Strafor wrote: “The Soviet Union also came as close as any power ever has to uniting Eurasia into a single, integrated, continental power—the only external development that might be able to end the United States’ superpowership. These little factoids are items that policymakers neither forget nor take lightly. So while US policy towards China is to delay its rise, and US policy towards Venezuela is geared toward containment, US policy towards Russia is as simple as it is final: dissolution.”

Muslim separatists in Russian regions of the Caucasus, such as Chechnya and Dagestan, have enjoyed Washington’s tacit support, while the Russian state views the struggle against them as a critical national security issue.

Iran has served as a critical counterweight to US criticism of Russia’s role in these wars. As analyst Brenda Shaffer wrote in a 2001 Washington Institute for Near East Policy paper, “Partners in Need”: “Moscow views cooperation with Tehran as essential for preventing a Muslim backlash in response to Russian activities in Chechnya: the official Iranian view of the conflict as an internal Russian affair undermines Muslim efforts to band together against Moscow.”

Besides the implications for ethnic conflicts in the Caucasus and Central Asia, US bases in Iran would have global implications for US-Russian conflict. They would place US spy and attack planes even closer to Russia’s southern border, which has long been identified by the US military as one of its least well-defended.

Much of Russia’s highest-security military, nuclear, and space infrastructure is located in northern Kazakhstan and western Siberia—areas which were once the furthest points on the globe from any US military facility, but are now increasingly vulnerable to US strikes from the south.

Russian acquiescence to US military action against Iran would therefore be predicated, at the very least, on the US giving security guarantees to Russia. However, US policy towards Russia—supporting regimes in Azerbaijan and Georgia hostile to Moscow, and pushing for the deployment of a “missile shield” in Central Europe directed against Russia’s nuclear arsenal—makes such guarantees impossible.

The administration of Russian President Putin has therefore pursued an increasingly confrontational policy. It supplied Iran with high-tech missile systems, notably Tor-M1 anti-aircraft missiles, which Tehran reported successfully testing in February 2007. It is also rumored to have supplied Iran with advanced Moskit anti-ship cruise missiles that are updated models of Soviet missiles designed for attacking US aircraft carrier battle groups.

Direct military relations with the US have also become tenser. In August 2007, Putin ordered Soviet-era “Bear” strategic bombers to resume constant patrol flights in the North Atlantic, forcing US air defense systems to monitor them. Just this week, he officially withdrew from the Conventional Forces in Europe treaty.

Iran and the Chinese bourgeoisie

The Chinese bourgeoisie’s ties to Iran are shaped by its emergence, out of the Stalinist Chinese Communist Party, as the owners of a massive, cheap-labor manufacturing base. It holds down workers’ struggles for higher wages and living standards with a ruthless, police-state apparatus and exports much of their production. Especially as China has become the location of an ever-larger portion of world industrial production, its energy demands have spiraled upwards.China has developed massive energy ties with Iran. It currently buys 11 percent of Iran’s oil exports, but this figure is expected to increase substantially in the coming years. Iran is reportedly China’s largest supplier of oil, and Chinese corporations have signed several large-scale deals with the Iranian government.

In 2004, for instance, China’s Sinopec Group signed a $70 billion oil and gas agreement with Iran, according to which it will purchase 250 million tons of liquefied natural gas over the next 30 years and develop Iran’s Yadavaran oil field. As part of the deal, Iran also agreed to sell China 150,000 barrels of oil per day.

China has also purchased rights to oil in Kazakhstan, its western neighbor in Central Asia, as well as in several African countries, notably Sudan.

Oil is central to many of the weaknesses of the Chinese bourgeoisie. Its oil deals serve many purposes: overcoming the energy shortages and power outages that have plagued its rapidly developing but poorly coordinated industry, and lessening the economic imbalance between its coastal exporting regions and its poorer western regions, which historically were linked to Central Asia and the Muslim world via the fabled Silk Road.

In global geopolitical terms, however, the main purpose of China’s dealings with Iran is to secure its access to energy, which at present is largely at the mercy of US naval forces in the Indian and Pacific oceans.

Oil exports from the Persian Gulf to China pass through the Indian Ocean, the Straits of Malacca, and into the South China Sea and the Pacific Ocean to the Chinese coast. Major US naval bases at Diego Garcia in the Indian Ocean, Singapore (at the end of the Straits of Malacca), and Okinawa (off the Chinese coast) lie astride each main leg of the voyage.China has so far sought to protect its oil supply by building a competing network of naval bases—the so-called “string of pearls”—and looking for alternate shipping routes to avoid US-held strong-points. A 2006 US military study lists Chinese “string of pearls” bases at Gwadar in Pakistan, Chittagong in Bangladesh, and Sittwe in Myanmar on the Indian Ocean; and at Woody and Hainan Islands on the South China Sea.

Chinese plans for skirting the Malacca strait include building a pipeline from Sittwe in Myanmar to the southwest Chinese city of Kunming, and dredging a canal through Thailand’s Kra Isthmus. Plans for avoiding the South China Sea and Pacific include shipping oil up the Mekong River in Southeast Asia to China.

Such plans are very costly, however, and involve the Chinese Navy in a technological and military competition with the US Navy that it is not currently in a position to win. As a result, Chinese oil corporations and Chinese state planners have hoped to build a safer land route for the energy trade between China and the Middle East, passing through Central Asia and Iran.The underlying strategic conception was outlined in a 1999 article by Xiaojie Xu in the OPEC Review, entitled “The oil and gas links between Central Asia and China: a geopolitical perspective.” Xu wrote: “In terms of regional energy links [...] China will extend its Central Asian land routes from Kazakhstan and Turkmenistan down to Northern Iran. As a result, the Chinese Central Asian corridor will connect the Gulf Area as a Sino-Arabic grand passage.”Plans for such commercial links, ambitiously titled “The Pan-Asian Global Energy Bridge,” were regularly discussed in 2001. The US intervention in Afghanistan in the aftermath of the September 11 attacks dealt a serious blow to these ambitions, however, as Central Asian states were unwilling to openly flout US military power.

By now, however, such plans have resurfaced, amid the ebbing of US influence in Central Asia—the debacle of the US occupation of Afghanistan, and the failures of the 2005 “Tulip Revolution” in Kyrgyzstan and the Andijan uprising in Uzbekistan.

In the November 2005 issue of the Journal of Contemporary China, Professor Niklas Swanstrom writes: “By gaining control over the Central Asian network of oil pipelines, China hopes to gain control over the oil that is transported to Asia from the Middle East. This is a Herculean task and hardly possible without international cooperation.

“The logical partner for China if it wants to control the oil of the Middle East [flowing] to China is Iran. [...] A Sino-Iranian network between [the western Chinese region of] Xinjiang through Kazakhstan, Turkmenistan, and Iran to [the Iranian Persian Gulf port of] Bandar Abbas has been discussed and the conclusion of such a plan would make China the most important transit state for oil in Asia.”

Significantly, Swanstrom concluded: “America will probably attach greater importance to the region after the finalization of the ongoing wars and focus its attention on Iran.”US nuclear primacy and preparations for war

The strategic imperatives pushing Beijing and Moscow to protect Iran from US attack clash with an American bourgeoisie determined to consolidate its hegemony—in world oil markets, the Middle East, and world shipping lanes. The tensions between the US and China, Russia and Iran have repeatedly come to public attention, as the US has adopted an increasingly threatening posture.

In January 2002, following an order from the Bush administration, the Pentagon delivered the Nuclear Posture Review to Congress. The report called for planning the use of nuclear weapons against seven countries: Russia, China, Iran, Iraq, North Korea, Syria, and Libya. The review was ultimately leaked to the Washington Post in March 2002.

The issue of US planning for nuclear war against China and Russia surfaced again in the March 2006 issue of Foreign Affairs, the publication of the highly influential US Council on Foreign Relations. In their article, “The Rise of US Nuclear Primacy,” Keir Lieber and Daryl Press argued that, due to the deterioration of Russia’s nuclear arsenal after the collapse of the Soviet Union, the US could destroy the entire Russian and Chinese nuclear arsenals with a devastating first nuclear strike. It noted several aspects of US defense spending and research suggesting that the Pentagon was actively trying to achieve this capability.

Lieber and Press noted that the policy of aggressively preparing for nuclear war against Russia and China was directly tied to the global calculations of US imperialism, particularly in the Persian Gulf. They wrote: “The United States is now seeking to maintain its global preeminence, which the Bush administration defines as the ability to stave off the emergence of a peer competitor and prevent weaker countries from being able to challenge the United States in critical regions such as the Persian Gulf. If Washington continues to believe such preeminence is necessary for its security, then the benefits of nuclear primacy might exceed the risks.”

Part 3: Globalization, Iran, and the dollar crisis

This is the final article in a three-part series. .

The important role of oil in US Middle East policy—and particularly in the campaign of war and occupation launched by the Bush administration—is widely acknowledged, though it is ignored by the corporate media. Less often discussed is the role of the oil trade in propping up the US dollar, and thus helping to maintain the increasingly tense and unstable relations between the world’s main trading blocs.

These tensions find their most finished expression in the US trade deficit and the crisis of US industry. Since the economic crisis and oil shock of the 1970s, the US has gone from the world’s largest industrial power to its largest debtor and importer. According to European Union (EU) statistics, in 2006 the US posted a trade deficit with all its major trading partners: 100 billion euros with the EU, 61 billion euros with Canada, 53 billion euros with Mexico, 73 billion euros with Japan, and 200 billion euros with China. Yearly capital inflows into the US of more than US$600 billion were needed to finance this deficit, as the rest of the world paid the US to buy the products it made.

In particular, the East Asian countries—China, Japan, and Korea—have amassed huge dollar reserves by lending money to the US to purchase their products. China’s dollar holdings alone are at least US$1.2 trillion, and total East Asian dollar holdings are estimated at more than US$2 trillion.

The material reality underlying this phenomenon in the US (and, to a lesser extent, in Japan and high-wage countries of Europe) has been wave upon wave of plant closures and layoffs, wage and benefit concessions by trade unions, and the shifting of much of the working class towards low-paying service jobs. As anyone who has shopped at a US discount store like Wal-Mart or Target knows, the living standards of the US population are dependent on the availability of cheap foreign manufactured goods.

The US bourgeoisie has continued to realize huge profits on such goods, however, by pocketing the difference between the low prices it pays to foreign manufacturers in the cheap-labor countries and the prices paid by the American masses. The survival of the downsizing of America’s industrial base has thus relied in large part on forcing foreign exporters to accept low prices for—and even lend money for the purchase of—their goods.

The US bourgeoisie has also partially relied on the implicit military threat posed by its strategic position in the Middle East. Simply put, every exporting country negotiating prices with US retailers must keep in mind that the US can threaten it with an oil blockade (if it imports oil) or with military attack (if it is near the Middle East). As has already been pointed out, Beijing’s foreign policy in the Indian Ocean and Southeast Asia shows the central importance of this preoccupation in the minds of leading Chinese state officials.

However, financial concerns also play an important role in encouraging other countries to hold dollars. Most of industry’s basic raw materials—oil, gas, metals, grain—are traded in markets that denominate their sales in dollars. This gives other countries a powerful incentive to accept US dollars in return for their products, even when they do not intend to purchase US goods: they will use these dollars to purchase raw materials on world markets.

The crisis of the US economy—notably the bursting of the sub-prime mortgage bubble and the rapid fall of the US dollar versus other major currencies—places a question mark over the viability of the strategy of exporting on credit to the US. The plunge of the dollar against other currencies means that their dollar holdings generate losses when converted back into those currencies, and there is increasingly the possibility of a major credit crisis in the US.Increasingly, the fall of the dollar is also encouraging exporters—notably oil-producing countries—to consider selling their commodities in different currencies, such as the euro.Such a shift would further decrease the incentive to sell goods and provide credit to the US economy: US dollars would no longer be needed to purchase essential raw materials on world markets. Absent the need to sell on credit to the US, the maintenance of current trading patterns would represent a very costly political decision to supply the US market with goods and financial backing.

Though the risk of a flight from the dollar in world currency and commodity markets is currently described as small by most bourgeois financial journalists, it is of utmost concern to the US bourgeoisie and is actively discussed in the US foreign policy establishment.In 2002, during a Capitol Hill Conference Series on US Middle East Policy, former US ambassador to Saudi Arabia Chas. Freeman said: “It seems to me that one of the major things that the Saudis have historically done...is to insist that oil continue to be priced in dollars. Therefore, the United States Treasury can print money and buy oil, which is an advantage that no other country has. With the emergence of other currencies and with strain in the relationship [between Saudi Arabia and the US], I wonder whether there will not be again, as there have been in the past, people in Saudi Arabia who raise the question of why they should be so kind to the United States.”

Referring to the massive inflows of capital financing the US trade deficit, Freeman added: “I think the issue is the US balance-of-payments deficit.”

Iran ditches the US dollar

Washington’s policy of embargo against Iran and war and occupation in Afghanistan and Iraq has destabilized this already tense situation and strengthened tendencies pushing toward the abandonment of the US dollar by the Middle East oil trade. Iran, which has no legal trade with the US, and upon which US financial authorities are trying to impose a total blockade of financial transactions, is perhaps the Middle Eastern power with the least reason to hold dollars.

Unsurprisingly, the Iranian state has progressively shifted its oil sales at the Iranian Oil Bourse out of US dollars and into other currencies, notably euros and Japanese yen. This event has gone surprisingly unreported in the US corporate media.

According to a March 2007 report in the Scotsman, China’s Zhuhai Zhenrong Corporation began paying euros for Iranian oil deliveries in late 2006. In September 2007, Japan’s Nippon Oil agreed to purchase oil in yen. In October 2007, AFP quoted Mohammad-Ali Khatibi, deputy head of the National Iranian Oil Company, as confirming Iran’s switch out of the US dollar.

Khatibi said: “Iran is selling about 85 percent of its oil in the non-dollar currencies. Currently, about 65 percent of the oil sale income is in euros and 20 percent in yen.” He also suggested that the remaining 15 percent of Iranian oil sales could soon be denominated in dirhams, the currency of the United Arab Emirates—a major Iranian trading partner.

The UPI press service interviewed PFC Energy analyst David Kirsch, who noted that for Iran, “a key motivation is the US informal sanctions that the Treasury, and [US Treasury] Undersecretary [for Terrorism and Financial Intelligence] Stuart Levey in particular, put on banks not to do financial transactions with Iran.”

Kirsch also implied that, should Iran be allowed to continue its currency policy unmolested, it might end up leading a shift of the Persian Gulf oil industry out of dollar-denominated oil sales. He said: “There is also another key issue that you are seeing, not just in Iran, but in other oil producers, especially Gulf oil producers, is given the depreciation of the dollar, it is better to hold their reserves at least in euros, it is a better store of wealth. Some of the other Gulf producers will accept payment in euros.”

The geopolitics of the dollar and the euro

In the current tense international situation, the possibility that the euro might supplant, at least partially, the US dollar as the main currency of world trade is becoming tangible. The dollar’s role in international markets—from its plunge against other currencies to the explosion of (dollar) prices of global commodities and raw materials—resembles nothing more than worldwide theft benefiting the American bourgeoisie.

The rapid fall of the dollar risks pricing the European bourgeoisie out of world markets, as its goods are undercut by US competitors, whose costs are counted in cheaper dollars. It also cuts down the value of dollar-denominated profits realized abroad by European corporations, once brought back to Europe and converted into euros.

This was perhaps most prominently discussed by French President Nicolas Sarkozy during his latest trip to Washington, D.C. Noting that every cent that the euro rises against the dollar costs Franco-German airplane maker Airbus 100 million euros in profits, Sarkozy warned that “monetary disorder risks growing into economic war.” He refrained from adding that Airbus’s difficulties profited its only competitor, US-based Boeing.

For oil sellers like Iran, Russia, and the Persian Gulf kingdoms, most of whose trade is realized with Europe and Asia, the fall of the dollar against the euro (and to a lesser extent versus the Asian currencies) cuts into the purchasing power of their oil earnings, unless they are denominated in other currencies.

The Asian bourgeoisies, for whom the US is a key export market, are caught between surging prices for oil and raw materials on dollar-denominated markets, and the low dollar prices for their manufactured goods set by US retailers like Wal-Mart. According to figures published in Le Monde, in 2007 alone, dollar prices for oil, wheat, lead, and gold have increased on world markets by 64 percent, 63 percent, 118 percent, and 26 percent, respectively. This has led to what some, notably in Australia, have called the “China resources boom.”

The US government’s demand that China let its currency rise in value against the US dollar is an unsubtle invitation for the Chinese bourgeoisie to take large capital losses (in home-currency terms) on its gigantic dollar holdings.

Chinese officials have begun to argue for greater use of other currencies in trade and finance, and in the Chinese government’s own investment portfolio. On November 7, the vice-chairman of the Chinese parliament, Cheng Siwei, said: “In terms of the structure of our foreign exchange reserves, we should take advantage of the appreciation of strong currencies to offset the depreciation of weak currencies.... For example, in the current foreign reserves structure, I mean the bonds we bought, the euro is appreciating against the yuan while the US dollar is depreciating against the yuan. So we should make a balance between the two.”Another official, Xu Jian of the People’s Bank of China, commented: “The US dollar’s global currency status is shaky and the creditworthiness of dollar assets is falling.”

The interest of Chinese officials in other currencies, such as the euro, comes as Chinese goods are increasingly penetrating the European market. The EU reportedly overtook the US this year as China’s largest export market; already in 2006, the EU, due to its larger export volume to China, was China’s largest trading partner (216.2 billion euros, versus 208.9 billion euros for the US, according to EU figures).

Any significant shift in global demand for dollars toward demand for euros would, however, pose a massive challenge to the US economy. Due to its trade and current accounts deficits, the US requires daily inflows of billions of dollars in capital—that have so far largely come from East Asia—for its financial system to function. Any significant contraction of these inflows risks triggering massive interest rate increases and a collapse in the dollar, as demand for dollar-denominated debt dries up, and thus a serious recession in the US and world economy.In this context, it should be remarked that the US establishment has long been aware of the euro’s strategic and military implications. In 1997, five years before the launching of the euro, Harvard economics professor and US National Bureau of Economic Research CEO Martin Feldstein wrote in Foreign Affairs that the formation of a single European currency risked weakening “America’s current global hegemony.” He added that this “would undoubtedly complicate international military relationships more generally.”

The link between currency rivalry and military tensions is not the product of Feldstein’s imagination.

Such calculations clearly took place in Europe and Russia at the time of the US invasion of Iraq, in 2003—when the governments of Germany, Russia, and France were trying to oppose US plans for Middle East domination. At an October 2003 joint press conference with then-German chancellor Gerhard Schröder in the Russian city of Yekaterinburg, Russian President Vladimir Putin suggested that Russia could price its oil sales to Europe in euros.Iran’s more recent decision to sell its oil in euros and yen also takes place in a definite military context: a US campaign of political provocation resembling that which, in 2003, led to the US invasion of Iraq.

Conclusion

In remarking that current tensions over Iran threatened to provoke World War III, President Bush inadvertently acknowledged the profound tensions tearing at the political and economic foundations of world capitalism. Plans for a US war against Iran are baring the rivalries between the different cliques of the world bourgeoisie—American, European, Russian, Chinese, etc.—and their preparation for war against each other.

They are again affirming the basic contradiction identified by the great Marxists of the early twentieth century: the clash between the global character of mankind’s productive forces and the fetters imposed upon them by the capitalist nation-state system.

The idea that the current Middle East conflicts would remain localized in the case of US aggression against Iran is historical and political blindness. Globalization on a capitalist basis—with a ferocious competition inside the world bourgeoisie for the global division of profits, and where the living standards of the working classes of each region are pitted against each other in a race to the bottom—has dangerously outlived itself. It threatens not only a further eruption of US militarism in the Middle East and the destabilization of world finance, but a horrific global military conflagration.

Racism against Israel's Arab citizens has dramatically increased in the past year, including a 26 percent rise in anti-Arab incidents, according to the Association for Civil Rights in Israel's annual report.

Author Sami Michael, the association's president, said upon the release of the report that racism was so rife it was damaging civil liberty in Israel.

"Israeli society is reaching new heights of racism that damages freedom ofexpression and privacy," Michael said. The publication coincides with Human Rights Week, which begins Sunday.

"We are a society under supervision under a democratic regime whose institutions are being undermined and which confers a different status to residents in the center of the country and in the periphery," Michael said.

The number of Jews expressing feelings of hatred toward Arabs has doubled, the report stated.

According to the June 2007 Democracy Index of the Israel Democracy Institute, for example, only half the public believes that Jews and Arabs must have full equal rights.

Among Jewish respondents, 55 percent support the idea that the state should encourage Arab emigration from Israel and 78 percent oppose the inclusion of Arab political parties in the government. According to a Haifa University study, 74 percent of Jewish youths in Israel think that Arabs are "unclean."

The ACRI says that bills introduced in the Knesset contribute to delegitimize the country's Arab citizens, such as ones that would link the right to vote and receive state allowances to military or national service.

They also include bills that require ministers and MKs to swear allegiance to a Jewish state and those that set aside 13 percent of all state lands owned by the Jewish National Fund for Jews only.

"Arab citizens are frequently subject to ridicule at the airports," the report states.

It says that Arab citizens "are subject to 'racial profiling' that classifies them as a security threat. The government also threatens the freedom of expression of Arab journalists by brandishing the whip of economic boycott and ending the publication of government announcements in newspapers that criticize its policy."

Hadash Chairman MK Mohammad Barakeh said that the report "did not take us by surprise and neither should anyone be surprised by it. Its results are the natural consequence of a racist campaign led by political and military leaders, as well as the result of the anti-Arab racist policies implemented by consecutive governments."

This essay was originally published in the first issue of Monthly Review (May 1949).

Is it advisable for one who is not an expert on economic and social issues to express views on the subject of socialism? I believe for a number of reasons that it is.

Let us first consider the question from the point of view of scientific knowledge. It might appear that there are no essential methodological differences between astronomy and economics: scientists in both fields attempt to discover laws of general acceptability for a circumscribed group of phenomena in order to make the interconnection of these phenomena as clearly understandable as possible. But in reality such methodological differences do exist. The discovery of general laws in the field of economics is made difficult by the circumstance that observed economic phenomena are often affected by many factors which are very hard to evaluate separately. In addition, the experience which has accumulated since the beginning of the so-called civilized period of human history has—as is well known—been largely influenced and limited by causes which are by no means exclusively economic in nature. For example, most of the major states of history owed their existence to conquest. The conquering peoples established themselves, legally and economically, as the privileged class of the conquered country. They seized for themselves a monopoly of the land ownership and appointed a priesthood from among their own ranks. The priests, in control of education, made the class division of society into a permanent institution and created a system of values by which the people were thenceforth, to a large extent unconsciously, guided in their social behavior.

But historic tradition is, so to speak, of yesterday; nowhere have we really overcome what Thorstein Veblen called "the predatory phase" of human development. The observable economic facts belong to that phase and even such laws as we can derive from them are not applicable to other phases. Since the real purpose of socialism is precisely to overcome and advance beyond the predatory phase of human development, economic science in its present state can throw little light on the socialist society of the future.

Second, socialism is directed towards a social-ethical end. Science, however, cannot create ends and, even less, instill them in human beings; science, at most, can supply the means by which to attain certain ends. But the ends themselves are conceived by personalities with lofty ethical ideals and—if these ends are not stillborn, but vital and vigorous—are adopted and carried forward by those many human beings who, half unconsciously, determine the slow evolution of society.

For these reasons, we should be on our guard not to overestimate science and scientific methods when it is a question of human problems; and we should not assume that experts are the only ones who have a right to express themselves on questions affecting the organization of society.

Innumerable voices have been asserting for some time now that human society is passing through a crisis, that its stability has been gravely shattered. It is characteristic of such a situation that individuals feel indifferent or even hostile toward the group, small or large, to which they belong. In order to illustrate my meaning, let me record here a personal experience. I recently discussed with an intelligent and well-disposed man the threat of another war, which in my opinion would seriously endanger the existence of mankind, and I remarked that only a supra-national organization would offer protection from that danger. Thereupon my visitor, very calmly and coolly, said to me: "Why are you so deeply opposed to the disappearance of the human race?"

I am sure that as little as a century ago no one would have so lightly made a statement of this kind. It is the statement of a man who has striven in vain to attain an equilibrium within himself and has more or less lost hope of succeeding. It is the expression of a painful solitude and isolation from which so many people are suffering in these days. What is the cause? Is there a way out?

It is easy to raise such questions, but difficult to answer them with any degree of assurance. I must try, however, as best I can, although I am very conscious of the fact that our feelings and strivings are often contradictory and obscure and that they cannot be expressed in easy and simple formulas.

Man is, at one and the same time, a solitary being and a social being. As a solitary being, he attempts to protect his own existence and that of those who are closest to him, to satisfy his personal desires, and to develop his innate abilities. As a social being, he seeks to gain the recognition and affection of his fellow human beings, to share in their pleasures, to comfort them in their sorrows, and to improve their conditions of life. Only the existence of these varied, frequently conflicting, strivings accounts for the special character of a man, and their specific combination determines the extent to which an individual can achieve an inner equilibrium and can contribute to the well-being of society. It is quite possible that the relative strength of these two drives is, in the main, fixed by inheritance. But the personality that finally emerges is largely formed by the environment in which a man happens to find himself during his development, by the structure of the society in which he grows up, by the tradition of that society, and by its appraisal of particular types of behavior. The abstract concept "society" means to the individual human being the sum total of his direct and indirect relations to his contemporaries and to all the people of earlier generations. The individual is able to think, feel, strive, and work by himself; but he depends so much upon society—in his physical, intellectual, and emotional existence—that it is impossible to think of him, or to understand him, outside the framework of society. It is "society" which provides man with food, clothing, a home, the tools of work, language, the forms of thought, and most of the content of thought; his life is made possible through the labor and the accomplishments of the many millions past and present who are all hidden behind the small word “society.”

It is evident, therefore, that the dependence of the individual upon society is a fact of nature which cannot be abolished—just as in the case of ants and bees. However, while the whole life process of ants and bees is fixed down to the smallest detail by rigid, hereditary instincts, the social pattern and interrelationships of human beings are very variable and susceptible to change. Memory, the capacity to make new combinations, the gift of oral communication have made possible developments among human being which are not dictated by biological necessities. Such developments manifest themselves in traditions, institutions, and organizations; in literature; in scientific and engineering accomplishments; in works of art. This explains how it happens that, in a certain sense, man can influence his life through his own conduct, and that in this process conscious thinking and wanting can play a part.

Man acquires at birth, through heredity, a biological constitution which we must consider fixed and unalterable, including the natural urges which are characteristic of the human species. In addition, during his lifetime, he acquires a cultural constitution which he adopts from society through communication and through many other types of influences. It is this cultural constitution which, with the passage of time, is subject to change and which determines to a very large extent the relationship between the individual and society. Modern anthropology has taught us, through comparative investigation of so-called primitive cultures, that the social behavior of human beings may differ greatly, depending upon prevailing cultural patterns and the types of organization which predominate in society. It is on this that those who are striving to improve the lot of man may ground their hopes: human beings are not condemned, because of their biological constitution, to annihilate each other or to be at the mercy of a cruel, self-inflicted fate.

If we ask ourselves how the structure of society and the cultural attitude of man should be changed in order to make human life as satisfying as possible, we should constantly be conscious of the fact that there are certain conditions which we are unable to modify. As mentioned before, the biological nature of man is, for all practical purposes, not subject to change. Furthermore, technological and demographic developments of the last few centuries have created conditions which are here to stay. In relatively densely settled populations with the goods which are indispensable to their continued existence, an extreme division of labor and a highly-centralized productive apparatus are absolutely necessary. The time—which, looking back, seems so idyllic—is gone forever when individuals or relatively small groups could be completely self-sufficient. It is only a slight exaggeration to say that mankind constitutes even now a planetary community of production and consumption.

I have now reached the point where I may indicate briefly what to me constitutes the essence of the crisis of our time. It concerns the relationship of the individual to society. The individual has become more conscious than ever of his dependence upon society. But he does not experience this dependence as a positive asset, as an organic tie, as a protective force, but rather as a threat to his natural rights, or even to his economic existence. Moreover, his position in society is such that the egotistical drives of his make-up are constantly being accentuated, while his social drives, which are by nature weaker, progressively deteriorate. All human beings, whatever their position in society, are suffering from this process of deterioration. Unknowingly prisoners of their own egotism, they feel insecure, lonely, and deprived of the naive, simple, and unsophisticated enjoyment of life. Man can find meaning in life, short and perilous as it is, only through devoting himself to society.

The economic anarchy of capitalist society as it exists today is, in my opinion, the real source of the evil. We see before us a huge community of producers the members of which are unceasingly striving to deprive each other of the fruits of their collective labor—not by force, but on the whole in faithful compliance with legally established rules. In this respect, it is important to realize that the means of production—that is to say, the entire productive capacity that is needed for producing consumer goods as well as additional capital goods—may legally be, and for the most part are, the private property of individuals.

For the sake of simplicity, in the discussion that follows I shall call “workers” all those who do not share in the ownership of the means of production—although this does not quite correspond to the customary use of the term. The owner of the means of production is in a position to purchase the labor power of the worker. By using the means of production, the worker produces new goods which become the property of the capitalist. The essential point about this process is the relation between what the worker produces and what he is paid, both measured in terms of real value. Insofar as the labor contract is “free,” what the worker receives is determined not by the real value of the goods he produces, but by his minimum needs and by the capitalists' requirements for labor power in relation to the number of workers competing for jobs. It is important to understand that even in theory the payment of the worker is not determined by the value of his product.

Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of smaller ones. The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.

The situation prevailing in an economy based on the private ownership of capital is thus characterized by two main principles: first, means of production (capital) are privately owned and the owners dispose of them as they see fit; second, the labor contract is free. Of course, there is no such thing as a pure capitalist society in this sense. In particular, it should be noted that the workers, through long and bitter political struggles, have succeeded in securing a somewhat improved form of the “free labor contract” for certain categories of workers. But taken as a whole, the present day economy does not differ much from “pure” capitalism.

Production is carried on for profit, not for use. There is no provision that all those able and willing to work will always be in a position to find employment; an “army of unemployed” almost always exists. The worker is constantly in fear of losing his job. Since unemployed and poorly paid workers do not provide a profitable market, the production of consumers' goods is restricted, and great hardship is the consequence. Technological progress frequently results in more unemployment rather than in an easing of the burden of work for all. The profit motive, in conjunction with competition among capitalists, is responsible for an instability in the accumulation and utilization of capital which leads to increasingly severe depressions. Unlimited competition leads to a huge waste of labor, and to that crippling of the social consciousness of individuals which I mentioned before.

This crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation for his future career.

I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals. In such an economy, the means of production are owned by society itself and are utilized in a planned fashion. A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child. The education of the individual, in addition to promoting his own innate abilities, would attempt to develop in him a sense of responsibility for his fellow men in place of the glorification of power and success in our present society.

Nevertheless, it is necessary to remember that a planned economy is not yet socialism. A planned economy as such may be accompanied by the complete enslavement of the individual. The achievement of socialism requires the solution of some extremely difficult socio-political problems: how is it possible, in view of the far-reaching centralization of political and economic power, to prevent bureaucracy from becoming all-powerful and overweening? How can the rights of the individual be protected and therewith a democratic counterweight to the power of bureaucracy be assured?

Clarity about the aims and problems of socialism is of greatest significance in our age of transition. Since, under present circumstances, free and unhindered discussion of these problems has come under a powerful taboo, I consider the foundation of this magazine to be an important public service.

In the case of Hugo Chavez and the Venezuelan Bolivarian Revolution, the mainstream media and politicians in the United States have elevated their game of demonizing all who oppose US foreign policy and business interests to a higher level of absurdity than usual. According to the mainstream media, the only newsworthy stories in Venezuela are one sided diatribes lifted from the discredited, opposition-owned media in Venezuela. For example, we read about Chavez shutting down opposition TV stations. We hear that Chavez is rewriting the Venezuelan Constitution so he can be President for life. Chavez is a dictator, QED.All the badly outgunned, alternative media in the US can do is try its best to rebut the bias in the storylines defined by the mainstream media. The tiny fraction of Americans who visit the alternative media discover that Chavez has submitted a proposal to change the Venezuelan Constitution in a number of ways, one of which is to eliminate term limits on the office of President. All changes will first have to be approved by the democratically elected Venezuelan National Assembly, and then also approved in a popular referendum before they become law. Only Americans who search out the alternative media discover that Hugo Chavez was elected President by a comfortable margin in 1998, survived an opposition-sponsored recall in 2004, and most recently was re-elected in December 2006 with more than 60% of the vote. International observers certified all three elections as fair and square. George Bush, on the other hand, was selected President by a partisan Supreme Court after losing the popular vote in 2000, and won re-election only because enough black voters in Ohio were disenfranchised by a partisan Republican official to keep the Buckeye State in the Republican column in 2004. Few observers believe Bush could survive a recall election today, but of course this basic element of democratic rule is not permitted by the US Constitution. Nonetheless, the only storyline ninety-nine percent of Americans hear remains: Hugo Chavez is a dictator and George Bush is the democratically elected leader of the free world.

Similarly, only the small fraction of Americans who access the alternative media learn that RCTV was not shut down because it campaigns openly against the government -- which it has for nine years. Instead, when its license came up for renewal, its application was denied because it had violated 200 conditions of its licensing agreement -- many violations having to do with its role in helping to organize a military coup that nearly toppled the duly elected President of the country. Moreover, the station continues to broadcast on a cable network, and the opposition in Venezuela still broadcasts on more major TV channels than there are channels sympathetic to the government. In stark contrast, the alternative media in the US cannot be viewed on any major channel. Consequently the vast majority of Americans receive all their news from a mainstream media which never questions whether the US has any right to dominate other nations, but only debates the wisdom of alternative strategies for doing so, and would never dream of questioning the desirability of an economic system dominated by their corporate owners. Nevertheless the storyline most Americans hear remains: Freedom of the press is dead in totalitarian Venezuela, but alive and well in the democratic United States.

It is important to distinguish between whether mainstream coverage of issues like amendments to the constitution and the TV license is biased, whether there are grounds for reproaching the Venezuelan government, and whether the policies are wise. Clearly the mainstream media has failed to report relevant facts and their coverage has been grossly unfair. From what I know, the procedure that led to non-renewal of the TV license was unobjectionable, and the proposed constitutional amendment will be decided by a thoroughly democratic process. So while there are ample grounds for reproaching mainstream media coverage in the US, as far as I can see there are no grounds for reproaching the Venezuelan government in either case. However, this does not mean the policies are necessarily wise. Those in Venezuela who argue that the revolutionary government would be hammered by the imperial press in any case are surely correct. On the other hand, that does not mean either initiative is good policy, independent of the news coverage it receives. Moreover, giving one's enemies an easy chance to focus on a negative storyline seems unwise -- unless the policy has important benefits.

Unfortunately, the fact that only a tiny fraction of the American public are ever exposed to balanced coverage of the Venezuelan stories defined by our mainstream media is only one problem. A larger problem is that practically nobody in the United States ever hears anything about truly newsworthy stories in Venezuela. Stories about exciting new political and economic initiatives that are dramatically reducing poverty and challenging popular myths about the abilities of ordinary people to make good political and economic decisions for themselves go virtually uncovered in the United States.1

I speak fluent Spanish, have lived and worked in Latin America on two occasions, and have traveled extensively in Latin America for over forty years. One of the few Latin American countries I had never visited before a year ago was Venezuela. I have now made two trips to Venezuela in the past nine months at the invitation of the Centro Internacional Miranda. I was in Caracas for one week in October 2006 -- before the December 2006 presidential elections that provided Chavez with a popular mandate to pursue a more aggressive socialist agenda. During that visit I met with officials in the Planning Ministry and faculty and students in the Planning Ministry school. I had long discussions with people at the Miranda Center working on projects in critical pedagogy, participatory budgeting, new models of production, human development through popular participation, new forms of political participation, and new models of socialism for the twenty-first century. I also visited health clinics, subsidized food distribution centers, community radio stations, and adult education centers in poor neighborhoods in Caracas. During a two-week visit in July 2007 I visited the rural state of Lara as well as Caracas. In Caracas I participated in numerous seminars and meetings at the Miranda Center, attended an adult education class at the new Bolivarian University, met again with officials in the Planning Ministry and students in the Planning Ministry school, met with officials in the new Ministry for the Communal Economy, and visited with workers in a "recuperated" factory and activists in a "nucleus of endogenous development." In Lara I attended meetings of three rural communal councils, a meeting of spokespersons from ten other rural communal councils, a meeting of spokespersons from all the communal councils in the town of Carora, and talked with citizen directors of a communal bank. I also met with the mayors of Carora (state of Lara) and Libertador (state of Carabobo) who pioneered participatory budgeting initiatives in their municipalities. What follows is an account of some stories I believe many Americans would find truly newsworthy.

Economic Progress

Like most Latin American economies, the Venezuelan economy deteriorated during the 1980s and most of the 1990s. From 1998 to 2003 real per capita GDP continued to stagnate while the Chavez government survived two general strikes by the largest Venezuelan business association, a military coup, and finally a devastating two month strike by the state owned oil company. However, after Chavez survived the opposition sponsored recall election, annual economic growth was 18.3% in 2004, 10.3% in 2005, and 10.3% in 2006, and the unemployment rate fell from 18.4 % in June 2003 to 8.3% in June 2007. Moreover, most of the growth was in the non-oil sectors of the economy, as the oil sector barely grew during 2005 and 2006. While this impressive growth would not have been possible without the rise in international oil prices, it also would not have been possible had the Chavez government not ignored the warnings of neoliberal critics and pursued aggressive expansionary fiscal and monetary policies.

At the height of the oil strike the poverty rate rose to 55.1% of households and a startling 62.1% of the population. However, by the end of 2006 the poverty rate had declined dramatically to 30.6% of households and 36.3% of the population, which compares favorably with a pre-Chavez rate of poverty in 1997 for households of 55.6% and for individuals of 60.9%. While much of this decrease in poverty was due to strong economic growth, it was also due to a dramatic increase in social spending by the Chavez government. Social spending per person by the central government increased by an average of 19% per year from 1998 to 2007. However, this does not include social spending by the state-owned oil company. If social spending by PDVSA is included, there was an increase of 35% per person per year since 1998. The most dramatic increase in social spending was in the area of health care. In 1998 there were over 14,000 Venezuelans for each primary healthcare physician, and few physicians worked in rural or poor urban areas. By 2007 there was one primary healthcare physician for every 1,300 Venezuelans, and many of the new physicians were working in clinics in rural areas and poor barrios that had never had physicians before.2 There are also now 16,000 stores in poor areas throughout the country selling staples at a 30% discount on average.

Building the Social Economy

Reforms First: For eight years the Chavez government went out of its way not to threaten the private sector. Despite relentless hostility and numerous provocations from the Venezuelan business association and the privately owned media, there were few nationalizations and the state sector did not grow appreciably. While the government did launch a serious land reform, the program proceeded more cautiously than government rhetoric and landowner complaints would lead one to expect. Instead, Chavez concentrated on redirecting profits from the state owned oil company to social programs to benefit the poor, and financing development of what the government called the "social economy." In addition to increasing spending dramatically on healthcare and food subsidies, the government launched a massive program of adult education. Millions of poor Venezuelans have now overcome illiteracy, and hundreds of thousands have received primary diplomas and secondary degrees studying in store-front schools named Mision Robinson I (literacy), Mision Robinson II (primary), and Mision Rivas (secondary).

But none of this addressed the high rate of unemployment and the most pressing economic needs of those who had voted Chavez into office. The business sector was hostile to the Chavez government from the outset and oscillated between economic sabotage and capital flight. So the private sector could not be relied on to increase investment, production, and employment. Nor was extensive nationalization an attractive option because Chavez wanted to avoid provoking the business community unnecessarily, and there was a shortage of competent officials who were also politically trustworthy to run more state enterprises. Moreover, neither Chavez nor his closest associates were enamored of the "state socialist" model. So increasing employment by expanding the state sector was also not seen as a desirable option. Determined not to renege on electoral promises to better economic conditions for his supporters as many populists in Latin America have in the past, Chavez launched a massive program to create worker-owned cooperatives in both rural and urban areas.

Cooperatives: New worker-owned cooperatives not only provided much needed jobs producing much needed basic goods and services, they also featured what was soon to become a hallmark of Bolivarian socialism -- popular participation at the grassroots level. When Chavez was first elected President in 1998, there were fewer than 800 legally registered cooperatives in Venezuela with roughly 20,000 members. In mid-2006 the National Superintendence of Cooperatives (SUNACOOP) reported that it had registered over 100,000 co-ops with over 1.5 million members.3 Generous amounts of oil revenues continue to provide start-up loans for thousands of new cooperatives every month, and the Ministry for the Communal Economy continues to spearhead a massive educational program for new cooperative members. However, the ministry provides more than technical assistance regarding technology, accounting, finance, business management, and marketing. It also teaches participants about cooperative principles, economic justice, and social responsibility.

Participatory Budgeting: Even before the December 2006 referendum provided Chavez with a popular mandate to deepen the social revolution, the government had moved ahead to add participatory budgeting and local economic development initiatives called "nuclei of endogenous development" to the educational Misiones, subsidized food stores, and worker cooperatives comprising the social economy. Three international experts on participatory budgeting in other countries were part of the Miranda Center work team during my visit in July. Richard Franke (USA) shared his research on the history of participatory budgeting in Kerala India, and Marcos Arruda (Brazil) and Daniel Schugurensky (Canada) shared their research on participatory budgeting in Brazil with those developing the program in Venezuela. What was clear to all of us was that while the practice of participatory budgeting may be more advanced in Kerala and Brazil where decades of experience have helped people learn how to deal with important practical problems like how to combine technical expertise about public work projects with popular determination about priorities, the prospects for participatory budgeting in Venezuela are much greater.

A hostile national government in India limits how far the left united front government in the state of Kerala can take the program there. And unfortunately the Lula government in Brazil has done little to build other elements of a "solidarity economy" to compliment participatory budgeting, and even damaged the reputation of participatory budgeting by using it to administer austerity measures. In Venezuela, on the other hand, the President and Congress are now fully supportive of participatory budgeting and busy building complementary components of a full-scale "social economy." In Venezuela, participatory budgeting is viewed by many not merely as a better way to make decisions about local public goods, but as part of a process to democratize all aspects of economic life. Not surprisingly some local officials have resisted participatory budgeting because it challenges their traditional powers and privileges. Others, like the mayors of Carora and Libertador who turned all municipal revenues over to neighborhood assemblies to use as they saw fit, have embraced the program as well as the changes it brings to the role of mayor.

Communal Councils: After the referendum in December 2006, a major campaign to organize and empower communal councils was launched as a new step toward building the social economy. The Ministry of Participation and Social Development, MINPADES, worked to establish the initial components of the social economy. In 2004 the Ministry for the Popular Economy, MINEP, was created to help build new components of the social economy. When the government decided to create communal councils in every neighborhood, MINEP was strengthened and renamed the Ministry for the Communal Economy, MINEC. After lengthy debate, it was decided that communal councils should be comprised of twenty to fifty households in rural areas and two-hundred to four-hundred households in urban areas. Since communal councils are the building blocks of a whole new political structure in Venezuela, it may seem odd that sometimes they are comprised of fewer than fifty families in rural areas. The small size was chosen to ensure that every family, even in rural areas where small villages are often distant from one another, would have a real chance to participate in the most fundamental political decisions that affect them.

All the rural communal councils we visited in the state of Lara had decided that housing was a high priority. Each went through the difficult process of deciding which families would get new houses since there was not enough to provide new houses for all. We asked the members what criteria they used. We asked about nepotism. We asked what happened to families who were disappointed and disagreed with the decisions. While answers varied, the major criterion taken into consideration was need -- the state of a family's existing housing and the number of children. While all tried to reach consensus, in some of the communal councils votes were taken, and in some cases those who were disappointed threatened to leave. A major difference between councils was how far they stretched their housing budget by providing materials locally, reducing the number of rooms, or providing labor. In one case, a council member was a builder himself who was able to oversee much of the building by community members, thereby stretching the housing budget the farthest. The builder did not receive one of the new houses because, we were told, his house was predictably in decent repair. He said he was not disappointed because he was confident he would receive a new house next year, or the following, after others whose houses were in worse repair got theirs. In another council the disappointed family who had threatened to leave was talked out of it, in part because they thought they had a good chance of getting a house the following year.

Other projects varied a great deal. One communal council built a facility to raise chickens -- against the advice of a government agronomist who thought they would be better off upgrading their facilities for goat herding. We asked who would work in the new communal chicken farm, how they would be paid, and how profits would be shared. It was clear from their answers that all of that remained to be thought through, although everyone agreed that not all would be expected to work in the communal chicken business since some had paying jobs outside the community that nobody expected them to give up. Several councils had mud roads paved over so people would be able to get out to a main road during the rainy season. One built a health clinic. Both these projects required coordination with outside agencies. Council spokespeople lobbied the municipality to pave more of their mud roads and only used communal council funds to pay for the remainder. The Ministry of Health had to be consulted about staffing the clinic. One communal council decided to build a community building for meetings and festivals.

The meetings we attended were well attended -- with representation from over half of the households. That was frequently not the case initially, as facilitators -- often municipal employees who had previously worked in educational Misiones -- had to help communities organize a second meeting after attendance was poor at the first meeting. Choosing more convenient meeting times, passing out more flyers, and knocking on more doors was often necessary, but making clear residents would forego significant funds unless they created a communal council eventually led to functioning communal councils in every community in the municipality. Every communal council had elected a vocero, or spokesperson, and a suplente, or substitute spokesperson, for each theme decided by the communal assembly (for example, health, recreation, electricity, etc.). Of the roughly two hundred spokespersons we met in rural communal councils and urban communal councils in the town of Carora, a disproportionate number were poor women of color with several children. Most of them had only recently become politically active. Almost all of them were strongly Chavista. A disproportionate number of facilitators in the municipality were younger women from working-class families who had some college education, who were also strongly pro-Chavez. One spokesperson we interviewed extensively was a middle-aged white man who appeared to be the wealthiest person in his community and was active in an opposition political party. His neighbors were fully aware of his political allegiance, which few of them shared, but expressed complete trust in his integrity and described him as the person in the community who was best at getting things done. For his part, he expressed strong support for participatory budgeting and communal councils for which he credited Chavez and the Chavista mayor of Carora. But he said he had no intention of quitting his opposition political party or becoming a Chavista himself.

Activists, Politicos, and Experts: While it is important to focus on what is happening on the ground, and what activists in different parts of the social economy are thinking, one should not ignore the influence of politicians and ministries that affect the social economy. More than anyone else, of course, Chavez has the greatest effect on the political agenda in Venezuela and especially on initiatives in the social sector. My impression from his speeches, and from what senior fellows at the Miranda Center who are familiar with his thinking have told me, is that Chavez is both the leader of the entire Chavista movement, but also the leader of its radical wing. Over the past nine years Chavez has frequently led the charge to deepen the process of social change -- often through new initiatives in the social economy. In this respect the role played by Chavez has been similar to the role Mao played in China during the 1950s and 1960s when he was both the head of government and the party, but also the leader of the left-wing faction within the CCP.4 What we might call the "Chavista camp" is an amalgam of small left parties and groups that initially included some small centrist and center-left parties as well -- all predating his election -- and a much larger diverse group of activists politicized by different campaigns and programs launched by his government. Although there is now an attempt underway to create a unified Venezuelan socialist party comprised of all who typically refer to themselves simply as "Chavistas," one of the defining features of the last nine years has been the absence of a unified socialist political party driving the political process -- for better or worse.5

While somewhat arbitrary and imprecise, it is useful to distinguish between two different tendencies within this diverse and loosely knit "Chavista" camp. The vision of the more moderate tendency includes left-Keynesian policies combined with further welfare reforms, but does not extend beyond a market system with a "mixture" of private and public enterprise. Since one of the two opposition parties representing the oligarchy, Accion Democratica, is officially a social democratic party and member of the Socialist (formerly Second) International, one has to be careful when using the term "social democrat" in Venezuela. But elsewhere this moderate tendency within the Chavista camp would be described as solidly social democratic, and mostly unmarred -- at least so far -- by retrogressive "third wave," or "New Democrat" tendencies. These moderates within the Chavista camp are generally less optimistic than those in the more radical tendency about the ability of ordinary Venezuelans to make good decisions for themselves, and therefore tend to be more skeptical about how well what we might call "power to the people" as opposed to "serve the people" initiatives will work.

The guiding vision of the more radical tendency in the Chavista camp reaches far beyond a mixed economy guided by left-Keynesian policies and humanized by a substantial welfare state. Most in the radical tendency describe what they are part of as the "Bolivarian Revolution," and call their guiding vision "twenty-first century socialism." Because these terms are unique to Venezuela, they offer little help to those of us outside trying to understand what they mean.6 Those in the radical tendency see what is happening as a revolution because they see it as a profound social transformation and dramatic change in power relations among social groups. They also believe this revolutionary transformation should continue until popular self-rule has been achieved in every area of social life. These "Bolivarian revolutionaries" call their vision "socialist," but they do not emulate any models of socialism developed by those who called their societies socialist in the twentieth century. For example, while they see Cuba as their closest ally, pay homage to Cuba for its lonely but steadfast opposition to US imperialism for half a century, and admire all that Cuban socialism has achieved for the Cuban people, they do not see Cuba, much less any other "socialist" country, as the model of socialism they aspire to. In particular, they make clear that their vision of a twenty-first century socialist economy is quite different from the Cuban economic system and the economic systems in all other countries that call or called themselves socialist. Instead, Bolivarian revolutionaries are socialist in the sense that they are committed to achieving what they believe those who have called themselves socialist dating back to the nineteenth century have all aspired to -- an economy qualitatively distinct from capitalism, where production is for use not profit, and where workers and consumers plan their own activities democratically and equitably.

One is tempted to describe these radicals in the Chavista camp as libertarian socialists because of their insistence on the centrality of worker and community self-management, and their rejection of any models of socialism where it is absent. But this would be misleading in important respects. Few Bolivarian Revolutionaries seem to trace their intellectual origins to libertarian socialism. Nor do many of them share the libertarian socialist critique of Marxism-Leninism. While Bolivarian Revolutionaries do not believe any who called themselves socialist in the twentieth century succeeded in achieving socialism as they envision it, most of them appear to believe it was the intent of socialists in Marxist-Leninist parties who achieved state power to do so, even if they failed to find the means, or got lost along the way. They also have a different perspective on reforms than many twentieth-century libertarian socialists. They see their Bolivarian Revolution as an evolutionary revolution -- feeling its way toward new social relations and new human values -- rather than as an abrupt reversal of class rule derived from a change in control over the means of production. As best I can tell, most Bolivarian revolutionaries also regard reforms in what is still predominantly a capitalist economy as positive steps in the revolutionary process. Libertarian socialists have often been inclined to view reforms within capitalism negatively, as distractions deployed by the enemies of "real" social change to forestall revolutionary momentum.

My ability to gauge the thinking of "experts" working in ministries involved with the social economy is limited. It is based on a few conversations I was able to have with officials in the Planning Ministry and the Ministry for the Communal Economy, on reactions to presentations I made at both ministries, and on my review of the curriculum students are studying at the Planning Ministry school. I was constantly surprised and invariably pleased by what these "experts" were thinking. At the beginning of my first visit, at the risk of never being invited back, I decided to take advantage of my opportunity to address the vice ministers, faculty, and first class of students at the Planning Ministry school to challenge the traditional conception of socialist planning. I began my talk by saying that if they thought their job was to make better and better plans, I thought they were wasting their time at best, and having a negative effect at worst. After an embarrassed silence, I went on to say that instead I thought the job of people working in the Venezuelan Planning Ministry was to help workers in cooperatives and consumers in communal councils and assemblies plan how to cooperate more effectively among themselves. To my surprise my audience agreed. Moreover, they said they understood this meant they rejected the foundation underlying previous conceptions of socialist planning, and had, in effect, accepted a new prime directive: "Do not plan for others, facilitate planning by others." Since I was invited back, I have had several opportunities to confirm that people at the Planning Ministry were not merely humoring a rude foreigner during my first visit. I have also studied the curriculum and read the texts being used to train those who will soon be key personnel in the Planning Ministry. It is completely different from standard curricula on national planning and reflects the perspective of "facilitator" rather than "plan maker."

At the new Ministry for the Communal Economy, the people I met seemed equally clear about what their job was. They are busy creating the basic elements of a social economy -- self-managed worker cooperatives, communal councils, and communal assemblies. They are busy teaching the elected leaders of these cooperatives, councils, and assemblies that they must work with one another on the basis of mutual respect and solidarity rather than treat one another as antagonists in commercial exchanges. And finally, they are trying to help cooperatives, councils, and assemblies find practical ways to plan their interrelated activities fairly and efficiently among themselves so the market system can be replaced within the social economy. The fact that nobody before has ever succeeded in helping large numbers of autonomous groups of workers and consumers plan their joint activities democratically, equitably, and efficiently themselves does not seem to daunt those I met at MINEC. They are sceptical of formulaic proposals and believe answers for how best to do this will emerge from trial and error over time. But they seem convinced it can and will be done.

A sum bigger than its parts: At present the social economy -- made up of educational Misiones, healthcare clinics, subsidized food stores, worker cooperatives, nuclei of endogenous development, participatory budgeting, communal councils, and assemblies of communal councils -- is the most rapidly growing sector of the Venezuelan economy and is the driving force behind the Bolivarian vision of twenty-first century socialism. Its typical promoter in policy circles is a new breed of left intellectuals thoroughly convinced that ordinary people can make their own economic decisions and determined to devise means to help them do so. Its typical face is a newly empowered, poor mother of color -- and make no mistake, she is a force to be reckoned with! It is in the social economy, not the state sector, that the future of Venezuelan socialism lies. The state sector is in many ways disappointing. Attempts to promote worker participation in state enterprises have been largely unsuccessful. There have been no serious attempts to plan within the state sector, as state-appointed managers are expected to keep their individual enterprises out of the red -- both economically and politically! What one must hope for in Venezuela is that, as the new social economy deepens and grows, its values and institutions will eventually absorb not only the private sector but the state sector as well.

What I found particularly impressive was how clear Venezuelan revolutionaries are for the most part about how they want their social economy to function, and why it must differ from both a market system and the kind of bureaucratic planning common in twentieth-century socialist economies. They have correctly identified the Achilles' heel of centralized planning -- failure to allow for self-management. Every component of the new social economy is self-consciously designed to give "direct producers" and consumers control over the economic decisions that affect them. There are no bureaucrats to tell workers in their cooperatives what to produce and how to produce it. There are no politicians to tell residents of barrios what local public goods to prioritize in the participatory budgeting process. The families in the new communal councils discuss and decide on their own spending priorities in open meetings, and spokespeople from communal councils decide on municipal spending priorities in communal assemblies. Communal banks, whose officers are members of the communal councils that the banks serves, allow communities to make their own decisions about who among them most deserve loans and can make best use of available funds. And nuclei of endogenous development are designed to organize local resources to meet local needs through local initiatives in ways that devotees of community-based economics in the developed capitalist world can only fantasize about.

But those building the social economy in Venezuela also reject the anti-social effects of commercial relations inherent in the market system. From the very beginning, those working with the new cooperatives worried that market forces lead worker cooperatives to prioritize their narrow self-interest at the expense of community and social interests. MINEP training programs for new members emphasized that cooperative values include serving the social interest. The decision to encourage cooperatives to join nuclei of endogenous development was intended to build community ties, involve cooperatives in local planning initiatives, and help cooperatives see themselves as part of a larger community. The vision for the social economy is clearly one where producers in worker councils, and consumers in communal councils, and communal assemblies plan their own activities and coordinate their interrelations among themselves equitably.

In his Alo Presidente program on September 14, 2003 devoted to the social economy, Chavez emphasized: "The social economy bases its logic on the human being," and its purpose is "the construction of the new man, of the new woman, or the new society." Popular participation, equitable cooperation, and solidarity -- the defining features of the social economy -- also permeate the new Bolivarian Constitution. Article 299 emphasizes the need to ensure "overall human development." Article 102 calls for "developing the creative potential of every human being." Article 62 declares that participation by people is "the necessary way of achieving the involvement to ensure their complete development, both individual and collective," and calls for democratic planning and participatory budgeting at all levels of society. Article 70 refers to "self-management, co-management, and cooperatives in all forms" as examples of "forms of association guided by the values of mutual cooperation and solidarity."

Socialism for the Twenty-First Century

I was invited to work with the Miranda Center and speak at both the Ministry of Planning and the Ministry for the Communal Economy primarily because my chief research interest is how to make economic planning more participatory. As traditionally studied this subject has two subfields: Most researchers focus their attention on how to broaden and deepen participation of members within a worker council or cooperative, or how to facilitate participation of consumers within a consumer or communal council. A smaller group of us focus our main attention on how production and consumption units that are internally self-managed can coordinate their interrelated activities among themselves fairly and efficiently while preserving their autonomy. A unique feature of a theoretical model of a participatory economy7 I helped design is a "participatory planning" procedure which solves this problem without resort to either markets or a planning bureaucracy. The participatory planning procedure is designed to give worker and consumer councils autonomy of action while helping them discover and commit to an equitable and efficient division of labor among themselves -- with as little time wasted in discussion and meeting as possible. To what extent my research in this area proves useful to those building the social economy in Venezuela remains to be seen.

In my opinion, all the essentials for a truly participatory, social economy are already in place in Venezuela -- worker cooperatives, communal councils and assemblies, and participatory budgeting. A strong political campaign encouraging popular participation, economic justice, and solidarity is in full swing. And the search for practical ways for worker cooperatives, communal councils, and communal assemblies to coordinate their interrelated activities themselves -- democratically, fairly, and efficiently -- is on. From what I saw during my visit, a great deal is being discovered about how to coordinate effectively with other units in the social economy by those who are making participation within worker cooperatives and communal councils a reality. From what I heard, most involved in developing the social economy in Venezuela understand that traditional solutions to the coordination problem should be studied as negative, not positive, examples to learn from. And from what I experienced, those involved on both the grassroots and ministerial levels in the first, great social experiment of the twenty-first century have open minds about how best to coordinate semi-autonomous groups in their social economy, and are asking all of the right questions about the pros and cons of different options.

There is no guarantee that all of this positive momentum will succeed, and one does not have to look hard to find reason for concern. In the US, the foreign policy establishment, which includes the leadership of the Democratic Party, remains adamantly opposed to the Venezuelan alternative to neoliberalism. Prior to the rise of Chavez, socialist political parties were not as strong in Venezuela as in some other Latin American countries, and therefore socialist ideology is still quite new to most Venezuelans. The hostility of the oligarchy and opposition parties has not diminished, and it is possible that disagreements between the moderate and radical wings of the Chavista movement will create dangerous political moments in the next few years. And finally, while much of what I saw and described above is extremely encouraging, the process of building the social economy has been very uneven. While millions of Venezuelans have been deeply affected and undergone a profound political transformation, there are still millions who remain passive even if they have benefited materially from a government-sponsored program. Socialism is by no means yet secured in Venezuela, and "all the right moves" is a lot to ask for. But what is happening in Venezuela should make us all more confident than ever that "a better world is possible," and millions of people in Venezuela are busy building it now.

1 I intend no criticism of alternative media coverage of Venezuela. For the most part, the alternative media does the best it can given the restrictive conditions under which it operates. In particular venezuelanalysis.com provides high-quality, professional coverage of Venezuela on a regular basis.2 For an informative report on the new neighborhood clinics where healthcare and medicines are free and the emphasis is on preventative medicine, see a three-part series by Rebecca Trotzky Sirr on the Upside Down World web site: upsidedownworld.org/main/content/view/852/1/.3 For a description of the cooperative sector in Venezuela, see Betsy Bowman and Rob Stone, "Venezuela's Cooperative Revolution," Dollars & Sense, No. 266, July/August 2006, Camila Pineiro-Harnecker in MRZine, mrzine.monthlyreview.org/harnecker051205.html, and articles by C. Pineiro-Harnecker, S. Wagner, and F. Perez-Marti at venezuelanalysis.com. For an excellent account of the role the "social sector" played prior to 2005, see Michael Lebowitz, Build It Now: Socialism for the Twenty-First Century, Monthly Review Press, 2006, Chapters 5, 6, and 7.4 I am not likening Chavez to Mao in any other way, and certainly not suggesting that Chavez is a "Maoist."5 A discussion of the pros and cons of attempting to organize a unified socialist party is beyond the scope of this essay. The initial local meetings of the five million Venezuelans who signed up to join the new party were beginning during my visit in July.6 On the other hand, because the terms are new and unique to Venezuela, they do help us avoid the mistake of thinking that the process and associated vision can be neatly pigeon-holed into familiar leftist categories from the past -- which they cannot.7 Michael Albert and Robin Hahnel, The Political Economy of Participatory Economics (Princeton University Press, 1991), and Robin Hahnel, Economic Justice and Democracy: From Competition to Cooperation (Routledge, 2005).